Jordan’s economic crisis threatens political stability

Protesters gather in front of parliament in Amman on February 1 with a sign that reads ‘Don’t raise prices’ [Muhammad Hamed/Reuters]

Angry at the decision to increase food prices last month, restive Jordanians are demanding the government’s resignation and the dissolution of parliament.

Last month, the government implemented a tax rise of between 50-100 percent on key food staples such as bread, in order to decrease its $700m budget deficit.

Jordan’s debt has now reached $40bn and its debt-to-gross-domestic-product ratio has reached a record 95 percent, up from 71 percent in 2011.

The economic crunch that squeezes the country will be particularly acute this year, after Jordan’s Gulf Cooperation Council (GCC) allies – Saudi Arabia, UAE, and Kuwait – did not renew a five-year financial assistance programme with Amman worth $3.6bn that ended in 2017.

The United States is now the only donor that has committed itself to support Jordan. On Wednesday, US Secretary of State Rex Tillerson signed a five-year $6.375bn ($1.275bn a year) aid deal with Foreign Minister Ayman al-Safadi.

This surpassed the previous agreement of about $1bn a year, signed with the previous US administration, by about 27 percent, and increased in length from three years to five.

During a joint press conference in Amman, Tillerson said the increase would support Jordan’s security roles in fighting terrorism and the conflict in Syria.

However, even with the increased flow of US aid that has funded budgets and projects since the 1950s, it remains unclear if Jordan’s economy will stabilise, according to analysts.

Hussam Abdallat, a political activist and former government official, told Al Jazeera the American assistance won’t benefit ordinary Jordanians.

“American aid to Jordan is useless to the average Jordanian; most of it goes to support the Jordanian military – which serves American interests, not Jordan’s – and the rest goes back to the US through US companies working in Jordan,” Abdallat said.

Any US aid that is not directly budgeted for economic development is “meaningless”, he added.

Regional stability

Aldarawi, who writes on the Jordanian economy, said devastating wars in neighbouring Syria and Iraq – the country’s biggest trading partners – have curtailed economic growth.

The harsh measures taken by the government will not improve economic stability and will only hurt the most vulnerable people in Jordanian society, he said.

“Prices and tax hikes are only hurting the poor and the middle class, especially in the absence of wage increases or social safety nets,” Aldarawi said. “These measures will only provide temporary quick fixes, not a long-term, strategic solution.”

He said tackling corruption was imperative, along with fixing the “collapsed education and healthcare systems.

“The government must start with fighting entrenched and endemic corruption within its ranks, recover billions of dollars of embezzled public funds, [and] create equality among the different segments of the population, especially towards those who pay more taxes but get fewer services and privileges,” said Aldarawi.

‘Economic disaster’

Abdallat, who leads several activist groups demanding political and economic reform, said Jordan’s political elite must be held accountable for their actions that have driven the country to the edge of financial ruin.

“People are protesting in several areas in the country and demanding the resignation of the government and the parliament, who are responsible for the economic disaster we are in now,” he said.

In Amman, where nearly half of Jordan’s 9.9 million population resides, criticism of government policies has spread over social media, but, so far, not significantly to the streets.

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Analysts say that, unlike residents of the capital, people in the southern and northern provinces are more dependent on government largesse and employment and will suffer greater hardship when the government is no longer able to meet their needs.

“At this rate, I am afraid that we will end up with a revolt of the hungry,” said Abdallat.

Hussein Mahadeen, a professor of social development at Mutah University in Kerak, south of Amman, said Jordan has a foreign aid dependency problem because of its political and social structure.

Mahadeen said Jordan is still transitioning from its tribal society roots into a semi-modern state.

“Lacking solid legal and civic institutions, to safeguard the rights and liberties of citizens and their ability to contest government decisions, is a major impediment towards its political and economic development,” he told Al Jazeera.

“The Jordanian society, for several reasons, is not mature enough socially and politically to be able to mount a serious challenge to the state’s ability to impose strict economic measures.”

‘Violent revolt’?

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For many decades, foreign aid and remittances from expatriate Jordanians in the Gulf region were the mainstays of the Jordanian economy that kept the country afloat.

This, however, created dependency, and a succession of Jordanian governments failed to take measures to wean the country off foreign assistance and become self-reliant, according to Mahadeen.

Jordan’s main problem is it hasn’t progressed and developed from a “functional state” after its creation by the British, after defeating the Ottoman Empire in World War I, he said.

Abdallat – who has been imprisoned several times for his criticism of the government – said he was concerned the economic situation facing Jordan could result in an uprising.

“If the current economic crisis persists, it might lead to a revolt, and I am afraid it will be a violent one,” he said.

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